China’s entry into the textile and apparel export business has already caused a number of plant closings in Central America. The prize is the U.S. market whose imports were valued by International Development Systems (IDS) at $82.8 billion in 2004. IDS provides services to the textile and apparel trade community and since 1986 has provided quota monitoring service.
According to IDS, in 2004 Nicaragua finished second as the fastest growing exporter of apparel and textiles to the U.S., growing 22.57% as compared to China’s 25.38% growth. With trade restrictions removed, China’s exports to the U.S. in 2005 are expected to grow at a vigorous pace.
Of all Central America countries involved in apparel, Nicaragua seems to have the greatest opportunity to serve as a competitive near shore manufacturing option, based not only on favorable terms it has received in the recently enacted CAFTA (Central American Free Trade Agreement), but because it has substantially lower labor costs than nearby neighbors and faster shipping times than Asia.